Rep. Stearns says he wants answers from big bankers

Saturday

Dec 27, 2008 at 12:01 AMDec 27, 2008 at 5:33 AM

Count U.S. Rep. Cliff Stearns among those who want answers as to why the big bankers who got big bucks from the government to shore up the economy got rewarded so handsomely for such questionable management skills.

By Bill ThompsonStaff writer

OCALA - Count U.S. Rep. Cliff Stearns among those who want answers as to why the big bankers who got big bucks from the government to shore up the economy got rewarded so handsomely for such questionable management skills.The Associated Press reported recently the 116 banks that to date have received a piece of the $700 billion federal bail-out package paid top executives nearly $1.6 billion in salaries, bonuses and other benefits in 2007.According to the AP, while some banks cut back executive compensation as the crisis loomed on Wall Street, some top managers from the bailed-out banks still received multimillion-dollar packages with benefits that included cash bonuses, stock options, use of company jets and chauffeurs, home security systems and country club memberships.Moreover, the financial woes of 53 banks - almost half of the total number - would have been covered by the portion of the rescue funding that went to the 600 highest-paid bankers, the AP reported. So far, Washington has distributed $188 billion of the total package.Goldman Sachs, for example, paid its top five executives a total of $242 million in salaries and benefits in 2007. This year, the firm has cut more than 3,000 jobs and posted its first quarterly loss since becoming a publicly traded company in 1999. In October, the firm received $10 billion in taxpayer money to help it stay afloat. Federal records reviewed by the AP also indicate that one of Goldman Sachs' expenses included $233,000 for one executive's car and chauffeur. The firm said that was necessary so "executives would have more time to focus on their jobs," the AP reported.In response, Stearns is among several in Congress from both parties who are angry over such behavior and want answers from Wall Street executives."It is outrageous that financial institutions benefiting from the taxpayer bailout awarded their top executives $1.6 billion in compensation last year," the Ocala Republican said in a prepared statement issued shortly after the AP report.Stearns argued that Treasury Secretary Hank Paulson should stop any taxpayer assistance to "firms that rewarded their executives for bringing them to insolvency." If Paulson does not act, Congress should, Stearns added.Stearns voted against the initial rescue plan in late September when it was first proposed in the House and again opposed it in a follow-up vote conducted a week later, after the Senate agreed to support the $700 billion Troubled Assets Relief Program, or TARP.Republican Sen. Johnny Isakson of Georgia promised to seek hearings on the executive pay plan, according to one news report following the AP article.

"To see incredibly high raises when we are in a difficult time and when people are tightening their belts illustrates the total lack of connection the corporate world has with the real world," Isakson told the AP. "These companies that accepted tax dollars should be more sensitive with what is going on in Main Street America."Democratic Rep. Peter Welch of Vermont issued a statement saying he had rallied 22 House members to urge banks receiving TARP funds to curtail executive compensation spending."It is unacceptable for banking executives to pad their pockets with massive bonuses and benefits after mismanaging their companies and coming to the American taxpayer for aid," Welch said in the statement. "The American people acted in good faith during the financial industry's time of need, and now it's time for banking executives to take responsibility for their actions and curtail their outrageous compensation practices."Stearns felt likewise."I can understand rewarding someone for doing a good job, but these executives guided these firms to near extinction and then turned to taxpayers for more funds," said Stearns, adding that Paulson should openly reject any future job or involvement with companies participating in the bailout."I am concerned that the bailout of these financial institutions lacks transparency and a workable means of clearly avoiding a conflict of interest," Stearns said. "By taking this step, Paulson could set the tone that 'business as usual' on Wall Street has ended."